USDA Lowers Yields
Nov 09, 2018
Good Morning from Allendale, Inc. with the early morning commentary for November 9, 2018!
Grain Markets continue to weigh the recent supply and demand numbers from around the world that have entered into the equation. Optimism over potential trade talks between the US and China are being underpinned by recent headlines. Remember, Veteran's Day is this Sunday. We'd like to thank all the Vets reading this today for their service to our country! Markets will have their normal trading hours Sunday night and Monday.
USDA Supply and Demand numbers reported a drop in corn stocks vs. last month from 1.813 billion to 1.736, a bit more than trade was expecting. The drop was due in part to USDA lowering the expected yield from 180.7 bpa to 178.9. Soybean stocks, however were raised more than expected to 955 mb from last month's 885, despite a yield drop of 1 bpd to 52.1. Wheat ending stocks were dropped modestly to 949 mb on a slight revision to seed use.
China adjusted their corn numbers going back to 2007 after a new 10-year census was conducted. USDA incorporated those changes into their data, and as a result world corn ending stocks went from 159.4 last month to 307.5 this month. China is known to keep tight controls on their stocks, so this new number should have limited price impact.
Weekly export sales had corn sales totaling 701,477 metric tonnes, within the 600,000 – 900,0000 trade estimate. Soybean sales were reported at 391,422 metric tonnes, under the 400,000 – 700,000 trade expectation. Wheat export sales of 661,241 metric tonnes were confirmed, above the 300,000 – 600,000 trade expectation. This wheat number was the second best sale for this marketing year.
Corn deficits in 2018/19 are expected to hit 29.3 million tonnes in China according to the Ministry of Agriculture. This is an increase from their previous estimate of 22.3. They cite the use of corn as animal feed for the increase.
El Nino is still expected to form in the Norther Hemisphere this winter according to US forecaster the CPC. They give an 80% change of El Nino though the winter months, and a 55 - 60% change of it lasting into spring.
The U.S. decision to review its tariffs on Argentine biodiesel could mean a reversal of fortune for exporters whose shipments from the South American country have been practically nil, the biodiesel chamber of Argentina said on Thursday. The U.S. Department of Commerce announced there was "just cause" to review the taxes it applied to Argentine biodiesel. (Reuters)
Managed money were largely seen as sellers in yesterday's trade selling 4,000 soybean contracts, 2,000 wheat, 4,000 soymeal, and 3,000 soyoil. They were buyers of 9,000 corn.
Terry Branstad, the U.S. ambassador to China said that a "frank" discussion is expected in diplomatic and security talks with China today. The agenda appears to be mostly military in nature, including the South China Sea and North Korea.
The new Democrat majority in the US House is expected to side with President Trump in the trade war with China. Some even expect they may further encourage the actions according to lawmakers and trade experts.
Beef sales for delivery in 2018 came to 11,504 metric tonnes. It is normal for sales to decline during this week. The four week average is 1% over last year. Pork sales were reported at 21,115 metric tonnes. The past four weeks have averaged 15% over last year.
Dressed Beef Values were lower with choice down 2.15 and select down 2.66. The CME Feeder Index is at 152.23. Pork cutout value was down 1.18.